Inflation Reaches 13.9% As Food Prices Increase

Zambia has recorded an annual inflation rate of 13.9% in February 2020. This figure is a further increase on the rate of 12.5% in January 2020, and 11.7% in December. It is the highest rate in almost three years.

In 2019 inflation started at 7.9% but rose following increased food prices as a result of drought and a poor maize harvest. The current rate is double the Bank of Zambia’s target of between 6 and 8%.

Zambia Statistics Agency Interim Statistician General Mulenga Musepa put the recent rise down to the increase of the price of both food and non-food products including electricity and petroleum.

The rate of year-on-year food inflation stands at a staggering 15.9%, meaning on average the price of food is 15.9% more expensive than it was in February 2019.

FNB Zambia has projected that the annual rate of inflation is likely to continue to reach double-digits in 2020 following increases in electricity tariffs and fuel pump prices.

“Inflation is projected to remain elevated in 2020 due to increase in electricity tariffs and hike in fuel prices. With inflation being elevated, the central bank is certainly poised to continue with monetary policy tightening to control inflation,” FNB stated.

However, in January President Lungu stated that the annual rate of inflation is expected to be within the 6 to 8% target rate this year.

At the annual greeting of the diplomatic corps at State House, President Lungu stated, “At this juncture, I am happy to announce to your Excellencies that the economic prospects for 2020 are positive. Projections include a real growth rate of 3 per cent and inflation to be maintained within the range of 6 to 8 per cent. In addition, the fiscal deficit is expected to reduce to 5.5 per cent and domestic revenue mobilization is projected to increase to at least 22 per cent of Gross Domestic Product (GDP). Fiscal consolidation will continue to be a priority to ensure sustainable and inclusive growth.”